The Pensions Authority publishes form of 2021 Annual Compliance Statement
On 11 November 2021, the Pensions Authority published the form of annual compliance statement (ACS) that trustees of pension schemes will be expected to prepare by 31 January 2022. In this article we discuss what the 2021 ACS covers and what trustees can do to prepare for more expansive compliance certification requirements in future years.

Background

The annual compliance statement (ACS) is a new requirement for pension trustees introduced by the European Union (Occupational Pension Schemes) Regulations 2021 (the IORP II Regulations) on 22 April 2021. Trustees are now required to:

  • prepare an ACS not later than 31 January each year for the preceding year with the first ACS due on 31 January 2022 for the year 2021;
  • submit an ACS to the Pensions Authority (the Authority) within one month after it has been prepared; and 
  • at least two trustees or, in the case of a corporate trustee, at least two directors must certify the ACS for accuracy and completeness.

What do trustees need to do?

The form of the 2021 ACS was published by the Authority on 11 November 2021. It addresses some, but not all, of the new governance requirements introduced by the IORP II Regulations. Some of the requirements which trustees must address under the ACS for 2021 include confirming: 

  • whether the scheme has an organisational structure in place with a clear allocation of responsibilities, together with administrative, accounting and reporting arrangements;
  • whether the scheme has at least two trustees or, where there's a sole corporate trustee, at least two directors;
  • whether the trustees consider ESG factors when making investment decisions;
  • whether the trustees have established a remuneration policy and approved a risk management and internal audit policies; and
  • whether the trustees have appointed a risk management and internal audit key function holder.

The Authority previously confirmed that trustees will not be required to submit the 2021 ACS to the Authority in 2022, though the Authority may request sight of the 2021 ACS from trustees as part of its ongoing supervisory activity at a later stage. 

Comment

The form of 2021 ACS has presented trustees with a much more limited range of governance obligations to address than was anticipated. This will be welcome news for many trustees who are in the early stages of addressing the new compliance requirements introduced by the IORP II Regulations.

However, the Authority has signalled that the content of the ACS will change in the coming years. Therefore, the whole ACS process will be an evolving one which will become more onerous as the range of IORP II related obligations covered by an ACS expands in future years. 

Although the Authority has confirmed trustees will not be required to submit the 2021 ACS to the Authority, it has reserved the right to request sight of it. 

How we can help

We are assisting trustees in drawing up a matrix to identify the obligations covered by the 2021 ACS and to document the corresponding arrangements/structures that they have in place to ensure compliance with those obligations. This matrix will assist trustees in documenting their actual compliance arrangements. 

This is something which will become increasingly important for trustees given the strengthened supervisory powers of the Authority and the expected expansion of the obligations covered by the ACS.

If you would like advice on how the ACS may impact on your pension scheme, please get in touch with Ian Devlin, Ciara McLoughlin or you usual William Fry contact. 

 

 

Key Contacts

Ian Devlin Partner

Ciara McLoughlin Consultant

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